What Does the Financial Accounting and Reporting Section of the CPA Exam Involve?
The Uniform CPA Exam is one of the most stringent qualification exams in the world. It requires a test taker to meet a high level of accounting education and leads to one of the greatest accomplishments, becoming a licensed CPA. The CPA profession is one of the most highly respected professions in the world and can be a fast track to a successful and lucrative career. However, you have to get through the CPA Exam first. The Exam is divided into four sections which are taken one section at a time.
- Financial accounting and reporting (FAR)
- Auditing and attestation (AUD)
- Business environment and concepts (BEC)
- Regulation (REG)
In this article we’ll take a look at the Financial Account and Reporting section, or FAR. Most CPA Exam Review courses and accounting instructors recommend taking FAR first. FAR is one of the most recognizable sections for test takers and is often considered the easiest because most of the content is directly related to your education. There is a good chance that you’ve already seen close representations of most of the questions or situations in one of your accounting courses. But don’t let your guard down, The Financial Accounting and Reporting Section of the 2015 CPA Exam can also be one of the toughest, as it is the most comprehensive and wide-ranging section of the entire exam.
FAR covers material from every financial and cost/managerial accounting course you went through in college, as well as governmental and non-profit accounting material. According to the American Institute of CPAs (AICPA), FAR covers concepts and standards for financial statements, typical items in financial statements, specific types of transactions and events, accounting and reporting for governmental entities, and accounting and reporting for nongovernmental and not-for-profit organizations.
The FAR section is four hours long and consists of three sections, or “testlets.” Each of these testlets consist of 30 multiple choice questions, although one has seven tasked-based situations. Depending on how well you answer testlet one will determine how challenging the questions in testlet two and three are. If you answer testlet one with relative ease and get most of them right, you will get harder questions in testlet two. If you struggle with testlet one, you will get easier questions in testlet two. However, the harder the question, the more points you will get for a correct answer.
Remember, if you’re getting harder questions in each testlet, it may signify that you’re getting them correct, so don’t get discouraged. One strategy that many exam-takers use is to mark all of the calculation questions and skip them. Complete all of the theory questions first, then go back and do the calculation problems. Sometimes calculation problems will take up more time, so you’re better off getting easier questions out of the way. By doing this, you’ll have a more accurate estimation on the amount of time you can dedicate to the calculation questions. Please note that this is only a suggestion, as each exam-taker has their own preferred method in taking exams. Go with what you’re most comfortable with.
Governmental and non-profit accounting can be up to 25% of the exam score, so make sure you study these concepts. Overall, be sure to do plenty of simulated multiple choice questions and practice exams for FAR. The more you practice and get used to FAR questions and simulations, the better chance you’ll be able to complete the exam with ease and pass the Financial Account and Reporting section of the CPA Exam. The night before the exam, make sure you get enough sleep and don’t become overly stressed. Have confidence in your preparation.